Layoffs are on the rise in the midst of crypto winter

But last week, Jia was one of the employees who received an email from Coinbase terminating their job offers. For Jia, that meant not only losing a job but also, possibly, a visa.

“I’m an international student and I have to keep my visa,” he told CNN Business. “Now, after Coinbase, I’d rather go to a bigger company because I’m worried about my visa.”

After initially planning to hire up to 2,000 more employees this year, citing “huge product opportunities ahead,” Coinbase has abruptly changed course. In recent days, the cryptocurrency exchange, which was previously valued at nearly $ 100 billion, has revoked bids, frozen hiring and fired 18% of its workforce.

In a company-wide email sent to employees on Tuesday announcing the mass layoff, Coinbase CEO Brian Armstrong said a possible recession and growth was approaching that occurred “too fast”. Employees learned they had lost their jobs after being blocked from their work emails. “I realize that removing access will be sudden and unexpected, and this is not the experience I wanted for you,” Armstrong wrote.

The sudden reversal in Coinbase recruitment reflects a broader trend in the cryptocurrency industry. A growing number of startups are cutting staff to survive a possible prolonged slowdown in the crypto market and the wider economy, creating a sense of whipping in the process among the many workers who joined these companies with the belief that crypto was next great. thing.

In one tweeted saturday, CEO Kris Marszalek has announced that the Singapore-based exchange will lay off about 260 workers, or 5% of its workforce. Another major exchange platform, Gemini Exchange, announced last week that it would lay off 10% of employees. And the Crypto BlockFi loan platform said it is cutting around 20% of its workforce.
In public statements, companies framed the cuts as necessary steps to address a change in economic conditions, amid concerns about rising interest rates and inflation. US stocks plunged into a bear market this week. Fears of recession are growing inside and outside the industry. And cryptocurrencies, previously thought to be a hedge against the stock market and inflation, have also fallen, with Bitcoin falling just above $ 20,000 on Wednesday, below an all-time high of nearly $ 20,000. $ 69,000 in November.

“It looks like we’re entering a recession after more than 10 years of economic boom,” Armstrong wrote in an email to Coinbase staff. “A recession could lead to another cryptocurrency winter and could last for a long time.”

However, in some cases, cryptographic executives are still trying to double their belief in the long-term potential of the market. As many believers in cryptography will point out, there have been notable previous declines over the years, including the 2018 Bitcoin crash and a decline in May 2021 that ended with $ 1 trillion in market value in one week. Some industry executives are stressing that cryptography is always recovering.
“Restriction is the mother of innovation, and difficult times are a must-have,” Cameron and Tyler Winklevoss, founders of Gemini, told employees. “The cryptographic revolution is underway and its impact will remain profound. But its trajectory has been anything but gradual or predictable.”

A fast-growing industry puts the brakes on

For many workers, the sudden cuts have been baffling and call into question the future of the industry.

Recruitment in the cryptographic sector doubled between November and April, with two of the top three employers being Gemini and Coinbase, according to data from ManpowerGroup, a global staffing company. Crypto companies raised $ 34 billion in global funding in 2021, an eightfold increase from the previous year, according to data from consulting firm PwC. Many employees who were drawn to an industry that until recently looked like a rocket are now left wondering if and when the good times will return.

“I was very, very happy when I got the job, and now it’s like I’m suffering from the loss,” said a recent graduate who had a job offer canceled by Coinbase and spoke on condition of anonymity because he feared repercussions. to his career. Another near-Coinbase employee who just graduated from college said, “My heart sank.”

Tyler Winklevoss (L) and Cameron Winklevoss, founders of the cryptocurrency exchange Gemini Trust Co., attend the Bitcoin 2021 Convention cryptocurrency conference at the Mana Convention Center in Miami, Florida, on June 4, 2021.
Although some of these recently laid off workers include engineers who may be sued in other companies, they nonetheless face the prospect of looking for new jobs at a difficult time for the technology sector. At a time when U.S. companies in general are laying off fewer workers, tech and fintech companies have been hit by rising job cuts. Technology companies fired more than 4,000 people in May, 781% more than the total cuts from January to April, according to a report by Challenger, Gray and Christmas. Fintech companies, meanwhile, saw a 268% increase in job cuts, according to the report.
The consequences for workers also extend to cryptographic startups in other countries. In Bitso, one of the largest exchanges in Mexico with more than 4 million users in Latin America, 80 employees they were fired in late May in reaction to falling markets. Many of the affected workers were recently hired, according to employees.

Executives “are afraid of losing money, and I totally understand, but it shouldn’t be acceptable to hire someone and fire them 40 days later,” Murso Bargas, a Bitso employee, told CNN Business. “They should see it coming. Cryptographic winter is not news to anyone.”

“I was in a room with an employee who was hired a week ago, so he did the incorporation work, and the following week he was fired,” Lucas Ferreira, now a former Bitso employee, told CNN Business.

“The decisions of our workforce are made in the long-term interest of our business to better support our customers and our strategy as a company,” a Bitso spokesman told CNN Business.

Brian Armstrong, CEO and co-founder of Coinbase, speaks during the Milken Institute Global Conference on May 2, 2022 in Beverly Hills, California.
A notable exception to the layoff trend is Binance. Binance on Wednesday announced 2,000 open roles in a tweet from CEO Changpeng Zhao, who appeared to be investigating the spending of other crypto startups such as Coinbase and “It wasn’t easy to say no to Super Bowl announcements, stadium naming rights, big sponsor deals a few months ago, but I did.” Zhao wrote in the ad.

“We’re entering this cryptocurrency winter from a strong position, and there’s really no way we’re ever going to come out of the cryptocurrency winter in a weaker position,” Brian Shroder, CEO of Binance’s U.S. arm, told CNN Business last week, before the hiring announcement. “In the last three days alone, we’ve interviewed six people from Coinbase and Gemini.”

As for when the crypto winter may end, anyone can guess. “That’s the beauty of cryptography: it literally ends next week, or we could be in it for over a year,” Shroder said.

Allison Morrow and Jordan Valinsky of CNN Business contributed to this report.

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